Correlation Between Pontex Polyblend and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Pontex Polyblend and CHINA DEVELOPMENT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pontex Polyblend and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pontex Polyblend CoLtd and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Pontex Polyblend and CHINA DEVELOPMENT and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pontex Polyblend with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontex Polyblend and CHINA DEVELOPMENT.
Diversification Opportunities for Pontex Polyblend and CHINA DEVELOPMENT
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pontex and CHINA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pontex Polyblend CoLtd and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Pontex Polyblend is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pontex Polyblend CoLtd are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Pontex Polyblend i.e., Pontex Polyblend and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Pontex Polyblend and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Pontex Polyblend CoLtd is expected to generate 7.48 times more return on investment than CHINA DEVELOPMENT. However, Pontex Polyblend is 7.48 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.13 of its potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.16 per unit of risk. If you would invest 1,405 in Pontex Polyblend CoLtd on September 1, 2024 and sell it today you would earn a total of 795.00 from holding Pontex Polyblend CoLtd or generate 56.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pontex Polyblend CoLtd vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Pontex Polyblend CoLtd |
| CHINA DEVELOPMENT |
Pontex Polyblend and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pontex Polyblend and CHINA DEVELOPMENT
The main advantage of trading using opposite Pontex Polyblend and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pontex Polyblend position performs unexpectedly, CHINA DEVELOPMENT can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Pontex Polyblend vs. Cheng Shin Rubber | Pontex Polyblend vs. Nankang Rubber Tire | Pontex Polyblend vs. USI Corp | Pontex Polyblend vs. Asia Polymer Corp |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Top |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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